Trying to clear some debt, easier said than done

chris1210

Hi peeps.

Basically over the past few years i've been nothing short of a dipstick - had a fascination with fast cars, and an inability to control credit card spending. As time has gone on, and i've met a lovely girlfriend, i decided it time to grow up and sort things out the best i could for now.

Basically, i took out an unsecured loan with my bank, Natwest, in November 2007 for £25k. Took this over 4yrs at 7.4% APR which gave me payments of £601p/m. Hideous when i think about it, but was more than perfectly manageable at the time. I also had a £2k debt on a mastercard.

A few weeks ago i decided enough is enough... so sold my car, and started the clean up operation last week. Bought myself a cheap diesel car, paid off the £2k credit card - and got a settlement figure from the bank for the loan which came in at £23,078.

I had planned to pay off £8078 and make the balance £15k, and pay that over 4yrs. With the advertised rate at 9.4%, that made monthly payments of £373. Still high, but much more manageable, when taken into consideration my other savings too.

Unfortunately, now the bank dont want to play ball. Whilst being as quick as hell to offer me the £25k at the advertised rate - now that i want to pay some money off, all they can offer me is the £15k at a whopping 14.9%! Monthly payments sit at £409 which is a pretty hefty sum more when looked at over 4yrs...

Called into the bank to vent my spleen, and just didnt get anywhere at all, which was even more frustrating. Tried for a loan elsewhere today and got rejected, so for some reason my credit rating is screwed (i live at home with parents btw).

Whilst i could pay the £8k off the loan to reduce the term, i really need to reduce my monthly outgoings as a rule, and im not sure what my best plan of action is now.

Do i bite the bullet at 14.9% and appreciate the still near £200pm saving..... do i sit with the £8k in a savings account somewhere building interest and making a few withdrawals a year to help me through the sticky months?

I'm a bit disillusioned with trying to pay off £10k of debt then being offered a rate of double what i was given in November.... i know its all risk based etc but come on

Any advice most welcome!

MrsTinks

Have you asked if you can pay the amount of the loan and reduce the payment instead of the term? Some might allow this - like Egg.
Also worth getting a copy of your credit report to make sure that nothing untowards has been put on your account incorrectly. Don't apply for anything else in the meantime.
I would not go for the 14.9% loan myself but put the money in a savings account and keep trying for another loan at a lower rate elsewhere once you have checked your rating. Also worth trying is the 0%apr cards... the vast majority of my debt is on 0% cards so all my repayments go on paying off my debt.
Why don't you post a full SOA so we can have a look see and maybe give you some ideas on ways forward?